In a March 7 entry to his washingtonpost.com weblog, The Fix, Washington Post staff writer Chris Cillizza wrote: "For the second time since signaling his plans to run for president, Sen. Barack Obama (D-Ill.) is battling allegations of ethical misjudgment." Cillizza was referring to a March 7 New York Times article highlighting the 2005 purchase, on Obama's behalf by his broker (and, Obama said, without his knowledge), of "more than $50,000 worth of stock in two speculative companies whose major investors included some of his biggest political donors," and a November 1, 2006, Chicago Tribune article highlighting a 2005 land deal between Obama and Chicago fundraiser Antoin Rezko, a supporter of Obama's 2004 Senate campaign. However, contrary to Cillizza's claim, the Times article did not contain an "allegation of ethical misjudgment" and the Post itself reported, in an article to which Cillizza linked, that there "have been no allegations that Obama ... committed any ethics violations" in the land deal.
For the second time since signaling his plans to run for president, Sen. Barack Obama (D-Ill.) is battling allegations of ethical misjudgment.
The latest incident comes courtesy of today's New York Times, which reports that shortly after arriving in the Senate Obama bought stock in two companies whose investors included several major donors to his campaign. One of the companies -- AVI Biopharma -- was developing an avian flu treatment even as Obama began work to secure increased federal funding for the disease.
Obama spokesman Bill Burton said that Obama had entered into a "trust agreement" in February 2005 whereby his stock broker neither solicited his advice on investments nor consulted him when trades were made. As a result, according to Burton, Obama was unaware that the stocks had been purchased and when he found out that he owned them in the fall of 2005 he immediately divested himself of the stocks at a financial loss.
"Obama owned stock in two companies which he did nothing to help -- an investment that lost him $13,000," Burton said in a statement released Wednesday. "At the end of a thorough examination of Senator Obama's portfolio, It's apparent that his dealings were completely above board and his decisions were proactively made in the interest of avoiding the potential for conflict."
The controversy comes on the heels of Obama's acknowledgment late last year that he made a "boneheaded" mistake in purchasing a property in Chicago on the same day that the Democratic fundraiser Tony Rezko bought an adjacent parcel of land. Less than a year later with Rezko under federal investigation Obama paid $100,000 to the fundraiser and his wife for a piece of the property.
The Times, however, reported that "[t]here is no evidence that any of [Obama's] actions ended up benefiting either company during the roughly eight months that he owned the stocks." The Times also noted: "Senate ethics rules do not prohibit lawmakers from owning stocks -- even in companies that do business with the federal government or could benefit from legislation they advance -- and indeed other members of Congress have investments in government contractors. The rules say only that lawmakers should not take legislative actions whose primary purpose is to benefit themselves." The article never accused Obama of "ethical misjudgment."
As Media Matters for America documented, Slate.com teased a December 14, 2006, article on the Obama/Rezko land transaction as "Inside Obama's Shady Real Estate Deal," but the article itself noted that there was no evidence Obama did anything wrong:
There's no evidence that the senator is fibbing or that the indicted fund-raiser asked anything in return for his neighborly behavior (though that might have been just a matter of time). Obama hasn't tried to change his story, even though Rezko is now talking to investigators.
Indeed, the December 17, 2006, Washington Post article about the Rezko land deal that Cillizza linked to in his March 7 entry explicitly stated: "There have been no allegations that Obama, whose political fortunes are soaring as he mulls a run for president, broke the law or committed any ethics violations."
As Media Matters documented, on March 7, MSNBC hyped the Times story as a possible "scandal," without noting that the Times reported that "[t]here is no evidence that any of [Obama's] actions ended up benefiting either company during the roughly eight months that he owned the stocks." The March 7 edition of ABC News' political newsletter, The Note, drew a comparison to the Clinton-era Whitewater scandal, without noting that the Whitewater investigations turned up no evidence of wrongdoing by either of the Clintons.